Which of the following are the pillars of the Basel Norms? 1. Capital adequacy requirements 2. Supervisory review 3. Market discipline 4. Government intervention Select the correct answer using the code given below:

[A] 1, 2, 3 and 4

[B] 1, 2 and 3 only

[C] 2, 3 and 4 only

[D] 1, 3 and 4 only

Answer: B

Notes:

In June 2004, Basel II guidelines were published by BCBS. The guidelines were based on three parameters, which the committee calls it as pillars.

Capital Adequacy Requirements: Banks should maintain a minimum capital adequacy requirement of 8% of risk assets
Supervisory Review: According to this, banks were needed to develop and use better risk management techniques in monitoring and managing all the three types of risks that a bank faces, viz. credit, market and operational risks
Market Discipline: This need increased disclosure requirements. Banks need to mandatorily disclose their CAR, risk exposure, etc to the central bank. Basel II norms in India and overseas are yet to be fully implemented.

Source: TMH Ramesh Singh